Business leaders blast Brown as more join NI rebellion

Gordon Brown was condemned as 'economically illiterate' yesterday as Labour's relationship with business plunged to a fresh low.

Another 31 bosses backed Conservative proposals to slash Labour's 'tax on jobs' because they say it will damage the economic recovery.

And the Tories - who Labour strategists fear have won the election's opening exchanges - renewed their attacks on the 1p National Insurance rise.

The Prime Minister sought to regain the initiative by pledging last night that Labour will not raise the basic rate of income tax above 20p.

Mr Brown will also rule out a rise in the 50p top rate of tax when he publishes Labour's manifesto on Monday - making it likely he would have to resort to freezing tax thresholds or further rises in National Insurance to balance the books.

In total 68 major business bosses, employing nearly a million workers, have endorsed the Tory policy to slash the jobs tax.

But the Prime Minister accused the businessmen of being 'deceived' and insisted that reversing the National Insurance rise would take £6billion out of the economy.

As the war of words intensified, Treasury minister Lord Young appeared to describe the businessmen as 'shysters'.

The outbursts threatened finally to sever Labour's relationship with business leaders.

Asked about their fury at the National Insurance rise, the Prime Minister said: 'I think they have been deceived. Britain is on the road to recovery.

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'Don't put that at risk. The Conservatives' policy would take £6billion out of the economy.'

Conservative leader David Cameron has renewed his attack on the 1p National Insurance rise

But Luke Johnson, founder of investment firm Risk Capital Partners and one of the latest to sign a letter backing the Tory policy, said: 'That's economically illiterate because you don't take £6billion out of the economy.

'You leave it in the hands of employers or employees. The employers are quite likely to invest the money in their companies and create new jobs.

'But if you make it more expensive to hire people what you surely do is discourage the private sector from creating new jobs.'

He dismissed Mr Brown's claim that business had been deceived as 'insulting'.

Twelve other bosses issued public statements denying they had been deceived.

The row led to angry exchanges in the final Prime Minister's Question Time before the election.

Tory leader David Cameron said: 'This Prime Minister would wreck the recovery by putting a tax on every job, on everyone earning over £20,000, a tax on aspiration, a tax on every business in the country.'

Mr Brown retorted: 'We can put National Insurance up and therefore protect our schools, our hospitals and our policing, or we can do what the Conservatives traditionally do and that is put our hospitals, police and our health service at risk.'

The Prime Minister then sought to change the subject with a pledge not to raise the basic rate of income tax.

He told Channel 4 News: 'Income tax rate has come down from 23p to 20p and we've kept it at 20p and that is what we will pledge to do in our manifesto.'

Labour sources last night made clear that the Prime Minister had overruled Chancellor Alistair Darling and Lord Mandelson on the National Insurance rise.

The first full poll since the election was called gave the Tories a lead of almost eight points last night.

The Populus survey put the Conservatives on 39.3, Labour on 31.6 and the Liberal Democrats on 20.8.

The Tory lead is broadly in line with recent polls but is lower than the ten-point lead recorded by the last Populus poll two months ago.